Gov't announces measures to tackle Korea's household debtUpdated: 2014-02-28 10:05:58 KST
The government announced on Thursday a set of measures for tackling the country's chronic household debt problem, with Finance Minister Hyun Oh-seok saying the government will be proactive.
"To bring the ballooning amount of household debt under control, the government has set a goal of lowering the debt-to-income ratio by five percentage points by the end of 2017."
The debt-to-income ratio stood at 1-hundred-64 percent as of the end of 2012.
The government said the debt-to-income ratio was near the mid-160 percent range at the end of last year.
Economists view household debt as a persistent problem for the economy, as it could affect domestic demand.
To address it, Korea's financial regulator urged local banks to raise the portion of fixed-rate loans.
"The Financial Services Commission plans to push local banks to increase the portion of loans with fixed interest rates and encourage households to repay the principal and interest together."
The regulator hopes to raise the portion of both fixed-rate loans and principal-interest repayments to 40 percent by the end of 2017.
"Financial regulators also said the growth in the amount of debt held by self-employed people or people using secondary financial institutions, such as savings banks, is a bad sign, as people in this group tend to have higher rates of defaulting on their debt.
Ji Myung-kil, Arirang News."
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